Ppp Ict Basis

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PUBLIC PRIVATE PARTNERSHIP

FRAMEWORK FOR E-SERVICEDELIVERY

September November 06, 2010



Background

• New Policy and Strategy for Public-Private

Partnership (PPP) was approved by the Cabinet

and the gazette was published on August 02, 2010

and replaced BPSIG• The Guidelines for large, medium and small

projects have also been approved



Approach

• Definition: providing public goods and services using privateinvestment

• Office of the PPP: A strong and independent lead agency for

PPP under PMO, CEO directly reporting to the PM

• Streamlined and simplified process

– Formulation, appraisal, approval

• Empowered line Ministries/implementing agencies

• Flexibility: Generic Policy and Strategy has been proposed

and guidelines may be updated time to time based on the

needs and experience of implementation

• CCEA can specify guidelines



Policy and Strategy

• Sectoral coverage (SIC codes)– BOTH infrastructure and service delivery

• Investment size– Small (BDT <500 mil.), Med (BDT 500-2500 mil.), Large

(BDT >2500 mil.)• Financial participation by government

– 1. TA; 2. VGF; 3. Infrastructure Financing

• Linked components

– Implemented by government– Financed by public and/or private funds

• Incentives to Private Investor– Fiscal and Special incentives, particularly for pro-poor

projects



Institutional Framework

Entity Chair ToRPPPAC Prime Minister • Guide Office of PPP, line Ministries to expedite

• Break down bottlenecks• Review progress at national level

CCEA Finance Minister • Approve guidelines, procedures, model docs

• Review contingent liability for Large projects• Approve incentives• Approve ‘In Principle’ for Med and Large; ApproveLarge• Approve org. structure of PPP Cell• Recommend PPP-related laws

Office of PPP

CEO • Prepare model docs and guidelines for approval• Promote PPP projects to investors• To select a panel of experts and transaction projects• Support line Ministries/impl. Agencies in formulation,pre-feasibility, feasibility, technical and contractualparameters

• Build capacity of line Ministries/impl. Agencies onPPP



Institutional Framework(cont.)

Entity ToRLine Ministry/impl. agency

• Initiate, develop, pre-qualify, tender and award PPP projects• Oversee implementation based on concession agreements• Recommend incentives• Proactively involve Office of PPP for own capacity building

Finance Division • Issue procedures and guidelines for financial participation bythe government• Approve funds for TA for proposed and VGF for selectedprojects based on concession agreements• Channelize funds for infrastructure financing

PlanningCommission

• Fast-track Linked Components (part of ADP)• Review ADP to prevent duplication



Process by Size of Projects

L

M

OPPP

OPPP

OPPP




OPPP



• The government has taken a two-pronged strategy for building public-private partnership:

– one is to attract investment for projects,where building new infrastructure andexpanding existing infrastructure is themajor component; the

– second is to attract innovation andsustainability of public service delivery tothe citizens.

PPP and e-Service Delivery



PPP and e-Service Delivery

• Service Delivery was focused– Objective 2.a.: Spell out principles of

partnership with private sector for

undertaking various projects related toinfrastructure as well as public servicedelivery;

• Dominant role of private party isrecognized

– Concept of PPP 3.d: In the PPP projects, theprivate sector is the active party who

undertakes activities, depending on the



Applicability of PPP

• Any project that generates public goods and services may be considered under the public-privatepartnership, if at least one of the followingcircumstances exist for the project :

1. The implementation of the project is difficult with the financialresources or expertise of the government alone;

2. Private investment would increase the quality or level of service or reduce the time to implement compared to whatthe government could accomplish on its own;

3. There is an opportunity for competition, where possible,among prospective private investors, which may reduce thecost of providing a public service;

4. Private investment in public service provides an opportunityfor innovation; and

5. There are no regulatory or legislative restrictions in taking



Sectoral Coverage

• Any project fulfilling one or more of above-mentioned applicability criteria in any economicsector, according to the International StandardIndustrial Classification (ISIC) of all EconomicActivities, Revision 4, specified by the United

Nations, is eligible for PPP.– 5.k: Telecommunication systems, networks and services

including information and communication technology(ICT) (ISIC 60-63)

– 5. n: IT park (ISIC 81-82)

– 5.o: social infrastructure e.g. health, education, humanresource development, research and development, andcultural facilities, (ISIC 85-88)

– 5.p: e-service delivery to citizens (ISIC 85)

– 5. q.iii: Rural Internet projects (ISIC 61)



Eligibility Criteria

• Any for-profit or not-for-profit entitylegally registered in Bangladesh orabroad at the time of submission of

proposals in response to Request forQualification or unsolicited proposalsis eligible for participation in PPP

projects.• However, at the time of contract

awarding, the foreign entity is

required to be registered as a legal



Investment Size and Ease of Processing

• Small: ICT Projects fit mostly in thiscategory

– BDT <500 million

– Approval Authority: Line Minister– No RFQ Stage

– Maximum 7 months for approval

Proactive role of a Ministry will bekey



Financial participation of theGovernment

• Viability Gap Financing– Viability Gap Financing (VGF) is meant for

projects where financial viability is not ensuredbut their economic and social viability is high.

– VGF could be in the form of capital grant orannuity payment or in both forms

– VGF in the form of capital grant shall bedisbursed only after the private sector company

has subscribed and expended the equitycontribution required for the project.

Rural Internet, ICT Education, Public Access to ICT,Poverty Alleviation Projects



Fiscal Incentives

• Reduced import tax on capital itemsunder PPP projects

• Tax exemption or reduced tax on

profit from operating/managing for aspecific time period

• Others specified by LM/ IA



Special Incentives

• Any specific project may get specialunique incentives with the approvalof the CCEA which shall be declared

in the RFP documents.• Special incentives may be extendedto PPP projects targeted for ruralor/and underprivileged population

• Special incentives may be given tonon-resident Bangladeshis (NRBs) toinvest in PPP projects.



Financial participation of theGovernment

• Infrastructure Financing– The infrastructure financing is an

arrangement for extending financing

facilities for the PPP projects in the formof debt or equity through specializedfinancial institutions



Suitable Models for ICT

• Swiss Challenge: Protecting IPR



Procurement Parameters of ICTProjects under PPP

Revenue GenerationPotential

Selection Criteria

Services with full

cost recovery

Highest Composite

Index on KPILowest costHighest revenue

sharing

Services with partialcost recovery ( inmany cases, fixedcost recovery isnot possible)

Highest CompositeIndex on KPI

Highest fixed costinvestment by privatesector



Business Models for PPP in ICT

E-service domain Project financing mechanism Returns to the private partner

Tax and Customs User charges as fees for service enhancementfrom citizens and businesses

% Share of the fees, per transaction

% share of additional revenuesmade possible byimproved audit andcollection programs

e-Procurement User charges as fees for service enhancementfrom participating government agencies,

subscription fees from prospectivesuppliers

% share of the amount of bid (with an upper

cap on the totalamount)

% share of the subscriptionamount

Certification andLicensing

User charges as fees for service enhancementfrom citizens and businesses (in addition tothe usual fees charged for issuingcertificates and licenses)

% share of the serviceenhancement fees

--

Social BenefitsRelated Viability gap fundingUser charges as fees for service enhancementfrom the government

% share of the serviceenhancement fees, per distribution

--

Health andEducation

Viability gap fundingUser charges as fees for service enhancement

from the government

% share of the serviceenhancement fees, per distribution

--

Source: Evalueserve Research



Priority in PPP [WB, 2007]ICT Projects BCS BASIS

Interested in PPP Priority Interested in PPP Priority

G2C

Tax related ▲▲ ▲▲▲

Social Benefits related ▲▲ ▲▲▲

roperty related ▲▲ ▲▲▲

griculture related ▲▲▲ ▲▲▲

ducation based ▲▲▲ ▲▲▲

ealth based ▲▲▲ ▲▲▲

Tourism related ▲▲ x --

G2B

Tax related ▲▲▲ ▲▲▲

Corporate Compliance related ▲▲▲ ▲▲▲

e-Procurement ▲▲▲ ▲▲▲

uctions ▲▲ ▲▲

Treasury Automation ▲▲ ▲▲



Thank You

Ppp Ict Basis

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